Broadcom Expects Big Chip Order

Broadcom Corp. expects to supply semiconductors for up to 3 million cable television set-top boxes for Cablevision Systems Corp., the largest cable-TV company in the New York metropolitan area, Broadcom Chief Executive Henry Nicholas said Friday.

Cablevision Systems is buying the set-top boxes from Sony Corp., which is likely to call on Broadcom to supply many if not all of the semiconductors, Nicholas said in an interview at a conference in Squaw Valley.

Irvine-based Broadcom is the No. 1 maker of semiconductors for digital set-top boxes and cable modems.

“We’re confident that we’ll end up with a very significant part of the silicon content in that box,” Nicholas said in an interview at Telecosm ’99.

Broadcom, which started by making chips that speed Internet access for homes and businesses and for digital TV converters, stands to benefit as cable operators move to combine those functions in a single box.

Last month, Cablevision agreed to pay Sony $1 billion for 3 million of these boxes, which use three or four chips to combine phone access, interactive programming, more channels and Internet access on TV sets.

Nicholas said the agreement is “material and important” for Broadcom. It won’t be the company’s biggest, though. Broadcom company sells more to Motorola Inc., which buys semiconductors for its cable modems, and General Instrument Corp., a maker of set-top boxes.

Motorola last month agreed to buy General Instrument, a move Broadcom expects to benefit from. Broadcom shares fell after the acquisition was unveiled amid concern that the company would lose General Instrument sales to Motorola’s chip division.

The share drop “puzzled me,” Nicholas said. The acquisition “lets us take a lot of the things we do with Motorola and blend them with General Instrument.”

On Friday, Broadcom shares rose $3.50 to $112.50. The stock has gained 86% this year, giving the company the currency to make five acquisitions since June.